Home loan aid fund in works

Proposed program targets middle-income buyers

Many `priced out of the market'

Idea gains officials' OK, interfaith group's interest

October 12, 2003|By Larry Carson | Larry Carson,SUN STAFF

Sharply rising prices have made home ownership a much tougher goal for middle-income families in Howard County, but county officials are moving to create a $500,000 revolving fund to bring houses within reach of up to 20 more families a year.

The proposed program, called the Social Investment Partnership Fund, is in the planning stages, county housing director Leonard S. Vaughan said. The county's Housing and Community Development Board approved the concept at a meeting Thursday night.

"If you look at housing prices, it's definitely necessary," Vaughan said.

He noted that Howard's median income is $67,300, meaning that half the county's residents make less than that. House prices have been rising in double digit percentages over the last several years, and the average home in Howard now hovers around the $300,000 mark.

"A substantial portion of Howard County's population is being priced out of the market," Vaughan said at the meeting.

Cathy Dodi, a Columbia resident representing a new group called the Interfaith Coalition, told the board that a group of synagogues and churches based at the Oakland Mills Meeting house has money that it would like to invest in the fund - up to $100,000.

She said congregations at other Columbia interfaith centers also might be interested in contributing to such a socially important program.

"We feel it is very important that our teachers, police officers, firefighters - the people who service our county - be able to live here," Dodi said.

The rest of the money would come from a combination of federal programs and from loans secured by the equity rapidly rising prices have created in about 40 homes that the county already owns a share of from other programs, Vaughan said.

He told the board that although there is a risk - as with any investment - he expects a 3 percent return on the money. Dodi, a member of the Columbia Jewish Congregation, noted that is "a better return than most stock options."

Vaughan gave the board several examples to illustrate how the program would work.

The basic idea is to use up to $50,000 from the fund as a second mortgage to reduce the price of a home, allowing a family to buy a home priced at $200,000 for $150,000 instead.

The assumption is that a buyer's income will rise, and after seven years - the average time Americans live in one home - the house would either be sold or the entire loan could be refinanced to pay the county back. Once repaid, the money could be lent to a new purchaser.

"The worst that could happen," Vaughan said, is that a buyer whose income does not rise would be forced to sell, but would still leave with a share of the home's appreciated value. In some cases, he said, repayment schedules could be extended.

The program still is in the design stage, Vaughan said, and the county still must decide whether to administer it through the Housing Commission or to set up a nonprofit agency to run it.

He said he hopes to be able to begin operating in about six months and eventually work up to about 20 loans per year.

"I think we're getting a good buy," commented board member Michael G. Reimer.

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